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Spotsylvania hopes to settle tax dispute with Kohl’s

Spotsylvania officials recently offered $25,000 to Kohl’s to settle a lawsuit the department store chain filed against the county. 

Kohl’s says the county has inflated the taxable value of its store in Cosner’s Corner by millions of dollars since 2008. The company would receive around $150,000 from Spotsylvania if it were to win the suit outright, County Attorney Jacob Stroman said.

He expects to receive a response from Kohl’s on the settlement offer soon. A two-day trial has been scheduled for September if the two parties don’t reach an agreement by then.

The Kohl’s and the land it sits on is currently assessed at $13.4 million, according to county records. That’s about $3 million more than the store’s first assessment in 2008.

The company says in its suit that the property is actually worth $6.6 million, or about half of its current assessed value.

Kohl’s purchased the land in 2007 for about $2.6 million and spent another $5 million to build the store, according to its suit.

In a response to the suit filed in October 2012, Spotsylvania denied that the Kohl’s assessments exceeded fair market value.

The lawsuit is at least the fourth in recent years disputing property assessments in Spotsylvania.

The owners of the former Capital One buildings in Lee’s Hill filed two suits—one for each building—accusing the county of over-assessing the properties by millions.

The county lost one of those suits and was ordered last year to refund about $200,000 in real-estate taxes to the owner. It settled the other for an undisclosed amount.

Spotsylvania Planning Commissioner Richard Thompson filed suit against the county last year after the assessed value of undeveloped land he owns increased 22.5 percent, from $290,200 to $355,600. He believes the taxable value shouldn’t have increased at all.

A trial has been scheduled for April in that case.

Spotsylvania issues assessments every two years. The next is scheduled for 2014.

Stroman said lawsuits over tax assessments were “extraordinarily rare” in years past.

“They’re still rare, but perhaps not quite as rare as they once were,” he said.

Property values have been all over the place since the housing boom and the economic downturn of recent years. Some people have been surprised by increases despite the poor market.

George Mason University law professor David Schleicher said: “My guess would be that anywhere you see gyrations in property values, you would see people having lots of problems.”

Virginia Association of Counties Executive Director James Campbell said he’s not aware of any trend in lawsuits over assessments.

“Normally, these issues can be resolved at the lower level,” he said.

Spotsylvania property owners, for instance, can appeal assessments to county appraisers and then to the Board of Equalization.

Last year, the county received 175 assessment appeals from commercial property owners, Commissioner of Revenue Deborah Williams said. It reduced the taxable value of 61 of those properties as a result of the appeals.

Stroman said the county offered a settlement in the Kohl’s suit partly so it wouldn’t have to spend money on expert witnesses.

“That’s money that the county will not recover even if it is victorious,” he said.

If Kohl’s accepts Spotsylvania’s offer, its assessed value would be lowered to correspond with the $25,000 settlement, Stroman said. Under the county’s proposal, the assessment would remain the same for 2008 and 2009 and decrease by about $1 million for tax years 2010 and 2011.

Efforts to reach a Kohl’s spokeswoman and an attorney representing the company in the case were unsuccessful.

Jeff Branscome: 540/374-5402